Important Information About Noncompete Agreements in Connecticut

Law Offices of Peter V Lathouris LLC Nov. 17, 2020

A noncompete agreement, also called a “covenant not to compete,” is a contract that business owners often ask their employees to sign upon employment. Many people underestimate just how important this particular type of contract can be. A noncompete can help you protect your business from unfair competition and ensure that your employees do not use the information and practices they learned through you to undermine your business. However, noncompete clauses must meet certain criteria to be legally enforceable in Connecticut. This is one reason why it is so important to have an experienced business lawyer review any employee contract for weaknesses or flaws.

How Can a Noncompete Benefit Me?

If you are like most business owners, you have probably put countless hours into your business. You may have honed your business strategies, pricing, sales techniques, marketing campaigns, employee policies and procedures, and other aspects of your business to be as efficient as possible. Even if you still have business goals and personal aspirations that you have not yet achieved, you are most likely closer to those goals now than you were when you first decided to start your company. A noncompete agreement helps protect all of this hard work from being used to benefit a competitor. When an employee signs a noncompete, he or she is agreeing not to work for a competing business for a certain period of time after leaving your company. This prevents the employee from using knowledge about your business to benefit a competitor or even to start his or her own competing business. Noncompete agreements may dissuade employees from leaving your company for a similar position at another company. They may also deter competitors from attempting to steal your most successful employees.

Making Sure Your Noncompete Agreement Is Enforceable

As with any business contract, your noncompete agreement is meaningless if it does not meet the criteria needed to be legally enforceable. Unlike some states, Connecticut does not outright ban the use of noncompetes. However, these contracts are subject to rules and regulations. Noncompetes must contain reasonable restrictions. The amount of time an employee is subject to the terms of the noncompete, the geographical scope of the agreement, and the extent to which the noncompete agreement affects an employee’s ability to earn a living are all factors you will need to consider when creating your noncompete. There must also be some benefit offered to the employee in exchange for him or her agreeing to the noncompete clause. Typically, this benefit or “consideration” is the job itself. However, if you are asking an employee who has already been hired to sign a noncompete, you will need to offer some type of additional consideration such as a promotion or a raise.

Contact a Fairfield County Business Law Attorney

If you are planning to start a business, purchase a business, or you are already a business owner in Connecticut, contact the Law Offices of Peter V. Lathouris, LLC for all of your business law needs. Our skilled legal team can help you with contract review and drafting, business disputes, and much more. Call us today and schedule a free initial consultation with our reputable Stamford, CT business lawyer today.